Thursday, May 23, 2013

Are you a professional athlete? Do you work with one? In her guest post below, sports and entertainment attorney Jaia A. Thomas shares with you her expert knowledge about how pro-athletes earn contingent and guaranteed compensation. Need help maximizing these revenue streams? Contact Jaia!

Jaia A. Thomas, Esq.

SHOW ME THE MONEY:

FOUR KEY STREAMS OF REVENUE FOR PROFESSIONAL ATHLETES

1). SALARY - The bulk of a professional athlete’s income is generated from the salary provided for by their team. The salary structure in professional sports varies depending on the league. However, the salary structures in MLB, NBA and NHL contracts are similar in the sense that they provide guaranteed revenue. The salary structure in an NFL contract, on the other hand, does not provide guaranteed revenue, meaning the players who are cut are not eligible to receive their salary from the team. It is worth noting that the NFL does, however, offer players the opportunity to receive additional income through various conditional and non-conditional bonuses:

Signing Bonus - This is a non-conditional bonus, paid once the player signs his contract.

Roster Bonus - This is a conditional bonus, paid only if a player is still on the active roster of the team at a specific date.

Workout Bonus - This is a conditional bonus, paid only if a player works out at the team facilities during the off-season.

2). ENDORSEMENTS - From sneakers to credit cards to home insurance, there are very few products and services professional athletes haven’t endorsed. Lebron James currently receives over $40 million in endorsement income from Nike, Coca-Cola, Samsung and McDonalds. Professional athletes receive a considerable sum of revenue every year from endorsement deals. These deals usually vary in regards to performance related pay structures. However, payment is usually contingent not only on player performance on the field but also player performance off the field. All endorsement contracts contain a ‘morals clause,’ making payment contingent on an athlete’s ability not to act in a way that significantly devalues the endorsement or embarrasses the company. It is also worth noting that many companies are now offering stock, ownership rights and a percentage in company sales as opposed to traditional monetary compensation.

3). EVENT EARNINGS/WINNINGS - In such sports as golf, tennis and boxing, where players are not employed by a specific team, they earn money through event earnings. However, even in those sports where players are employed by a team, players can earn additional revenue from event winnings. For instance, in 2012 the Patriots players earned an additional $62,000 each as part of the NFL’s playoff shares and even though they did not win the Super Bowl, they did receive an additional $44,000 for making a Super Bowl appearance (the Giants players received $88,000 each).

4). APPEARANCE FEES - From Eric Berry (Kansas City Chiefs Defensive Back who charges $5,000 for an appearance or speaking engagement) to Robert Allen Dickey (Toronto Blue Jays Pitcher who charges $20,000 for an appearance), athletes frequently earn additional revenue and income from speaking engagements and appearances.